Intel to join global job destruction initiative

20 April 2016

By Neil Patrick

The Wall Street Journal reported yesterday that Intel, the world’s largest computer chip maker is embarking on a swath of job cuts around the world, saying:

“Intel Corp. is planning to slash 12,000 jobs, 11% of its workforce, a consequence of the shrinking personal-computer market and the chip maker’s failure to take advantage of the industry’s transition to smartphones.

The restructuring announced along with first-quarter results on Tuesday is Intel’s largest yet in terms of the number of employees affected.”

The irony of the situation is obvious – one of the greatest creators and enablers of job destroying technologies in recent years is now having to face up to its own job loss tsunami. Champions of the job creation capabilities of the tech sector should be eating humble pie or at least turning maroon with embarrassment.

If the world’s tech giants are not going to create more jobs, who will? Intel isn’t a Facebook, an Uber, a TripAdvisor, i.e. one of the job-lite app-based giants of tech. It’s a manufacturer of the equipment that enables them and us.

We just got one step closer to a job free world.

Intel News issued a statement on 19 April confirming this:

“These changes will result in the reduction of up to 12,000 positions globally — approximately 11 percent of employees — by mid-2017 through site consolidations worldwide, a combination of voluntary and involuntary departures, and a re-evaluation of programs”

Meanwhile over on the Intel Twitter feed, despite this gloomy news, the Intel comms team were putting on a brave smiley face and were keen to tell us that they are in the world’s top six most ‘authentic’ brands and not at all a Micky Mouse company:

It’s not the end for Intel, but it does remind us how tech businesses are not immune to reality. All businesses have life cyles, some short, some long.

Intel’s troubles reflect a common challenge in the tech sector. Companies that lead one generation of computing often struggle in the next. For decades, IBM's large mainframe systems were the natural choice for the world’s biggest businesses. IBM’s business flourished across the board, yet IBM was forced to withdraw from PCs and low-price server systems as competitors sucked profits away from the business.

Intel’s troubles have been coming for a long time. After reaching a peak share price approaching $80 no doubt helped no end by the false flag of the Millennium bug (remember that?), the business share price has bounced around in the $15-$35 range ever since as investors have failed to see any significant grounds for major optimism:

What we are seeing with Intel is not the end but possibly the beginning of the end. And Intel’s own announcement reveals a dead giveaway:

"Chief Financial Officer, Stacy Smith, will transition to a new role leading sales, manufacturing and operations (my emphasis), once the company identifies a successor to Mr. Smith, a 28-year Intel veteran. The company has begun an executive search that will include internal and external candidates."

So a finance guy is being put in charge of sales, manufacturing operations.

I have nothing against finance people. In fact I like them. But they don’t know how to grow businesses. They just know how to reduce costs. When Finance is in charge of Sales and Operations, you know there will only be one outcome – short term profit gains and long term business contraction.

This is the classic life cycle of tech businesses: founded by technologists, then run by operations, followed by marketing, then sales, then finance, and finally by lawyers.

Intel appears to be just one step away from the end game…